If recent news reports are to be believed, it appears as if we may be bidding farewell to the retail industry’s brick-and-mortar stores as we know it. Yet, this is actually making way for e-commerce stores laying down bricks in select markets (see: Amazon and Wayfair).
And for every closure (see: Toys R’ Us, Bon-Ton and Rockport) and new opening, there is also a logistics story to tell. For the stores that do remain in existence, shaping their omnichannel strategy is of the essence for survival. And on the other end of the supply chain, carriers must shape their distribution networks in order to get products to their final destinations on time.
Consumers have come to expect their orders to be delivered in two days, one day or even within 1-hour time frames, or to be available for pick up at a nearby store after purchasing online. Because of this demand, shippers must have a solid final mile logistics strategy in place to fulfill rising online and mobile orders. The focus of last mile logistics is to deliver items to the end user as fast as possible. Many have noted that online giant Amazon set this expectation, leaving other retailers to follow suit – and it is evident that Amazon will not leave any stone unturned. Note the many industries that have been disrupted: exhibit A and B, C, D, and E. The bottom line remains that the logistics industry needs to respond to meet the ever-growing and evolving demand.
When it comes to having your package delivered in that 1-2 day timeframe, you can bet on UPS, FedEx and USPS to make that delivery. In some cases, for larger, bulkier items, less-than-truckload (LTLs) and larger truckload carriers are coming into play. Carriers are expanding their distribution networks to be placed as close to the consumer as possible to meet demand. And because of new HOS rules and the driver shortage, truck driving routes are becoming much more local rather than cross-country. The latest development comes from a third-party logistics provider launching a Last Mile service for home deliveries. Additionally, DHL announced that they are making a comeback to the U.S. for parcel delivery for online retailers, in direct competition with UPS and FedEx, with an express service launching in key markets before rolling out nationally.
Here’s a quick breakdown of how some giant retailers are enhancing their shopping options for consumers by revamping their final mile logistics:
- Whole Foods: It will come as no surprise that when Whole Foods was acquired by Amazon in early 2018, it was as a strong move to expand their distribution network. By placing Amazon lockers in stores for easy online order pick up or returns, this also strategically supports their Amazon Fresh grocery delivery service – which raises some questions as to the fate of InstaCart.
- Walmart: Because of stiff online marketplace competition, many retailers have become their own logistics provider. For example, Walmart has expanded their shipping services to China and North America by shipping direct to consumers, thereby cutting out middlemen like FedEx and UPS. On the door-to-door level, Walmart has even commissioned their hourly employees to drop off an order if it’s on their route home. This has since been revised and is being tested on a smaller scale.
- Target: Target has made some big purchases to enhance and strengthen their supply chain by acquiring Shipt, a same-day delivery company and Grand Junction, a transportation technology company which provides a software platform connecting retail, third-party logistics providers (3PLs) and distribution companies to fulfill orders.
The e-commerce delivery industry will continue to grow and see acquisitions as retailers look to expand and strengthen their logistics operations. With other players such as DHL coming back into the U.S. on the retail side, this could lead to more competition, allowing shippers more negotiating power with carrier options rather than relying on the same longstanding carriers to take their products through the final mile.
If you are interested in learning more about the logistics and e-commerce delivery industry, here are some key events that supply chain professionals will be attending the remainder of this year:
How have you noticed, from a consumer standpoint, that order shipment expectations have changed? How have you, from an industry perspective, responded to the growing influx of consumer online shopping demand?
Author: Veronica Chaidez, Account Manager, Outlook Marketing Services